F5 Networks CEO Seeing Big Traction In Security

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Heading into F5's annual Agility partner conference, where McAdam will be among F5 executives addressing some 800 partner attendees this week in New York, F5 is a billion-dollar company, is making inroads into security and other infrastructure markets helping it push beyond its application delivery networking core, and is delivering admirable financial results and hiring at an impressive clip.

For sure, F5, which by most estimates controls about half of the Layer 4-7 switching market, has slowed a bit. For its third fiscal quarter, F5 posted revenue of $352.6 million, up nearly 4 percent from $339.6 million sequentially, and over 21 percent from $290.7 million. Results were strong, even if several analysts needled F5 for merely landing in-line with analyst estimates and projecting a weaker-than-expected Q4: $360 million - $370 million compared with a Wall Street consensus of $377.8 million.

But with a forthcoming major refresh of its best-known lines -- including the next version of TMOS, F5's software architecture, and key products like its VIPRION chassis-based application delivery controllers -- and a strong and loyal channel to support them, it's hard to imagine F5 losing too much momentum.

So Q3 looked solid, even if your revenue growth slowed, and a lot of the analysts thought it a little weaker by F5 standards and weak in guidance. Were you happy with the results?

I've got to say yes. We're used to beating guidance, and feeling like we've done extremely well. We did see some slowness in the economy. But a lot of companies would give their right arm to have those kinds of results, our profits, our cash and 20-plus percent growth.

But you did mention a cautious spending environment. "Cautious" means different things, so what are you seeing specifically?

I do mean "cautious." We don't see the same situation that we did at the beginning of 2009 where things were really rough. For us at this time, it might be something like, and I'm making this up, it's a $3 million deal and it's a scenario where $1 million comes in and they've postponed the second piece of it. It's that type of environment right now. But there's a danger in reading too much into that, and I don't think it's anything like the 2009 scenario. We just hired 100 net-new people last quarter, and this quarter, we'll be hiring about 125 net-new people. In that 2009 scenario, we hired nobody. That's a big difference, in our view.

What's the feedback you're hearing from CIOs and technology buyers?

It's the same stuff you see when you watch CNN, or MSNBC, or Fox or whatever it is. I'm using the word cautious a lot, but we are very aggressive.